Banks collecting data on entrepreneurs with NPLs who may have used money to boost overseas accounts

By Yiannis Papadoyiannis

Bank officials say they have indications that some entrepreneurs who have defaulted on their loans may have secretly placed the cash they received in overseas accounts. Banks are now attempting to pinpoint those cases in a bid to recover some of the money owed to them.

Greek banks are in the process of collecting and in many cases exchanging data to identify cases where wealthy entrepreneurs may have taken out corporate loans only to boost their personal accounts in other countries. However, bank officials say that identifying them is quite a complicated matter, as in most cases those involved have left no discernible trail.

Credit sector professionals highlight a particularly interesting coincidence: Nonperforming loans (NPLs) add up to exactly the same amount as the money that has been removed from accounts at local banks since 2009: In December 2013 bad loans amounted to about 70 billion euros, while deposits had dropped to 160 billion euros from about 230 billion in 2009 – i.e. a difference of 70 billion. They explain that while they are not saying that all the bad loans have been turned into deposits abroad, they do believe there are strong indications of a connection, especially in corporate loans, between the NPLs and deposits that have been sent abroad.

Estimates by bank officials put the amount of money from local deposits that has been taken abroad to about 20 billion euros, while nonperforming corporate loans came to 30 billion at end-2013.

The same sources say it is quite likely that an amount close to 10 billion euros may concern “strategic defaulters,” or entrepreneurs who put their companies in debt in order to add to their personal accounts abroad. That may well concern people who realized that Greece might exit the eurozone in 2011 and 2012 and strategically decided to stop fulfilling their obligations and transferred all their money to accounts with foreign lenders.

Now, analysts say, many wealthy owners of companies are expecting the state to resolve the problem of nonperforming loans that they themselves knowingly created, hoping to benefit from a haircut on their repayments.